Understanding the Unit of Account – Even Bitcoin is Expressed in Dollars As Is Gold

Posted Feb 14, 2014 by Martin Armstrong

QUESTION: Mr. Armstrong; I read somewhere that neither gold nor silver were the actual unit of account in Rome. Is that true? And what did that mean?

Thank you

J

ANSWER: The “unit of account” in Rome began as bronze. The earliest money was just lumps of bronze that has practical value for it could be shaped into weapons or tools. Previously, money was cattle as it remains in many parts of Africa to this very day. The cattle in Africa are not eaten – they are the long-horn type. They are prized. The owner walks around with a band on his arm for each animal he owns displaying his wealth for status.

Despite the introduction of gold and silver that were first used in international trade – it was bronze which continued to be the main currency. Even during the beginning of the Imperial Era, bronze was still the unit of account even though silver was now the common currency for transactions. The Sestertius was used as the standard unit of account, and it is represented on inscriptions with the monogram HS. Large values were recorded in terms of sestertium milia, thousands of Sestertii, with the milia often omitted and implied. The super rich military general and politician of the late Roman Republic, Crassus who fought in the war to defeat Spartacus and funded Julius Caesar, was said by Pliny the Elder to have had ‘estates worth 200 million sesterces’.

A loaf of bread cost roughly half a Sestertius, and a sextarius (~0.5 liter) of wine varied based upon quality from less than half to more than one Sestertius. One modius (6.67 kg) of wheat in 79 AD Pompeii cost 7 Sestertii, whereas a modius of rye 3 Sestertii, a bucket cost 2 Sestertii, a tunic cost 15 Sestertii, and a donkey was 500 Sestertii all according to records that have survived. Records unearthed from Pompeii show a slave being sold at auction for 6,252 Sestertii – that was quite a sum. A writing tablet from Londinium (Roman London), dated to c. 75–125 AD, records the sale of a Gallic slave girl called Fortunata for 600 Denarii that was equal to 2,400 Sestertii.

During the 1st century AD, the standard legionary soldier was paid 900 Sestertii per annum, rising to 1,200 under Domitian (81-96 AD), the equivalent of 3.3 Sestertii per day. From this amount, about half of this was deducted for living costs, with net to the soldier of about .1.5 Sestertii per day.

By the 3rd century, the silver had been debased with bronze and the sesterius was no longer even minted. During the reform of Diocletian he attempted to reintroduce both silver and bronze with the new bronze coin being the Folles.

The US dollar was once a lot of money. However, the dollar remains the unit of account. It is a concept of value used around the world just as Roman coins were in ancient times. Saint Patrick upon traveling to Ireland, discovered that the unit of account was a slave girl. That did not mean you dragged a bunch of girls behind you to go shopping. What it meant was that this was the UNIT OF ACCOUNT that was being judged and everything else was valued in proportion to the value of a slave girl. Indeed, after the fall of Rome, the UNIT OF ACCOUNT became a slave girl in Britain and Ireland and this is why Saint Patrick wrote that his expenses were the cost of 15 humans. Without Rome, something had to emerge as the new standard of value by which everything else is measured.

Many cheer Bitcoin, yet it is being valued in terms of dollars that demonstrates that dollars will remain as the UNIT OF ACCOUNT. Even gold is measured in dollars. So for all the words of hate hurled at the dollar, they still measure everything in dollars – the world’s UNIT OF ACCOUNT as was the Roman Sesterius.